Earnings Labs

CrossAmerica Partners LP (CAPL)

Q1 2022 Earnings Call· Tue, May 10, 2022

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Transcript

Maura Topper

Management

Good morning and thank you for joining the CrossAmerica Partners First Quarter 2022 Earnings Call. With me today is; Charles Nifong, CEO and President. Charles will provide some opening comments, a brief overview of CrossAmerica’s operational performance and highlights from the quarter, and then I will discuss the financial results. At the end, we will open up the call to questions. I should point on that today’s call, we’ll follow some presentation slides that we will utilize during this morning’s event. These slides are available as part of the webcast and are posted on the CrossAmerica website. Before we begin, I would like to remind everyone that today’s call, including the question-and-answer session, may include forward-looking statements regarding expected revenue, future plans, future operational metrics, and opportunities and expectations of the organization. There can be no assurance that management’s expectations, beliefs and projections will be achieved, or that actual results will not differ from expectations. Please see CrossAmerica’s filings with the Securities and Exchange Commission, including annual reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of important factors that could affect our actual results. Forward-looking statements represent the judgment of CrossAmerica’s management as of today’s date. And the organization disclaims any intent or obligation to update any forward-looking statements. During today’s call, we may also provide certain performance measures that do not conform to US Generally Accepted Accounting Principles or GAAP. We have provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release. Today’s call is being webcast and a recording of this conference call will be available on the CrossAmerica website for a period of 60 days. With that, I will now turn the call over to Charles.

Charles Nifong

Management

Thank you, Maura. Maura and I appreciate everyone joining us this morning. As always, we thank you for your interest in the Partnership. During today’s call, I will briefly go through some of the operating highlights for the first quarter. I will also provide an update on certain trends in the market and review some additional information similar to what I provided on previous calls. Maura will then review in more detail the financial results. Now, if you turn to Slide 4, I will briefly review some of our operating results. For the first quarter of 2022, our wholesale fuel gross profit was $32.8 million, a 54% increase when compared to the first quarter of 2021, driven by increases in both volume and fuel margins. Wholesale segment gross profit was $46.9 million, an increase of 35% or $12.1 million when compared to the first quarter of 2021. Our wholesale fuel volume was 320.2 million gallons for the first quarter of 2022, an increase of 10% when compared to the same period of 2021, largely due to the acquisition of assets from 7-Eleven. In terms of same-store volume performance in wholesale for the quarter, we were down approximately 0.5% year-over-year. While we were close to flat on same site volume performance overall. For any given week in a quarter, there was material variability away from that overall number. In January, same site volume was down in a low double-digits year-over-year as the country dealt Omicron surge. February volumes were up in the mid-single-digits year-over-year as activity picked up when omicron receded. Finally, March volumes were negatively impacted by the surge in fuel pricing, due to the Ukraine conflict and other factors. The surge in fuel prices continue to adversely impact same site volumes into April. Although at recent weeks we have…

Maura Topper

Management

Thank you, Charles. If you would please turn to Slide 6. I would like to review our first quarter results for the Partnership. We reported net income of $5 million for the first quarter of 2022 compared to net loss of $4 million in the first quarter of 2021. The increase in net income was primarily driven by the year-over-year increases in operating income in both the wholesale and retail segments, with each segment benefiting from the acquisition of assets from 7-Eleven, along with the favorable fuel margin environment. Adjusted EBITDA was $32 million for the first quarter of 2022, which was an increase of 55% when compared to the first quarter of 2021. Our distributable cash flow for the first quarter of 2022 was $24.2 million versus $15.8 million for the first quarter of 2021, which was an increase of 54%. The increase in distributable cash flow was primarily due to the increase in operating income in both the wholesale and retail segments, partially offset by an increase in cash interest expense. Both the first quarter 2022 adjusted EBITDA and distributable cash flow numbers were record highs for the first quarter with the Partnership. Our distribution coverage for the current quarter was 1.22 times, compared to 0.79 times for the first quarter of 2021. Our distribution coverage on a paid basis, for the trailing 12 months, was 1.39 times, compared to 1.23 times for the 12 months ended March 31st, 2021. I’ll take a moment here to comment on the topic that is top of mind and for many of us at this moment, inflation. Throughout this first quarter, and past several quarters, we have been closely monitoring the impacts of inflation on our various costs, including the price of fuel, the price of merchandise as well as labor…

Operator

Operator

Thank you. And we will now begin the question-and-answer session. [Operator Instructions] so far we have no questions. So we’ll just give it a moment here just in case.

Charles Nifong

Management

Okay, well it doesn’t seem like we have today.

Operator

Operator

No, no questions. : :

Charles Nifong

Management

So again thank you to everyone for joining us on the call. As an additional note, Maura and I will be attending the EIC Investors Conference next week. We also be hosting a webcast to our presentation on Monday. We’ll be providing additional details on the webcast on our website later this week. So we hope that you’ll be able to join us on the webcast. Again, thanks for your interest in the Partnership. Have a good day.

Operator

Operator

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for joining. You may now disconnect.